Homo oeconomicus thesis – Foucault

Foucault identifies a theory of human capital that relies on a specific notion of homo economicus as one of the unique elements of American neoliberalism. Whereas the classical liberal homo economicus was a ‘partner of exchange’, the American neoliberal version is ‘an entrepreneur of himself, being for himself his own capital’ (Foucault, 2008, p. 226). With this model, neoliberalism seeks to extend the economic realm and economic thought into ‘a previously unexplored domain’, and on this basis inaugurates ‘the possibility of giving a strictly economic interpretation of a whole domain previously thought to be non-economic’ (Foucault, 2008, p. 219). The ultimate end of this process is the attempted ‘absolute generalization’ of the ‘economic form of the market’ throughout the ‘social body’ and the ‘whole of the social system’ (Foucault, 2008, p. 243). With neoliberalism, economics becomes an apparatus of how individuals, as homo economicus, pursue their self-enterprise in the face of scarcity. Because of the novel emphasis on analyzing the rationality of homo economicus, and because American neoliberalism seeks to render the entire social field intelligible through economic analysis, the question of how far homo economicus can be generalized becomes vital (Foucault, 2008, pp. 268–269). At stake for American neoliberalism is the ability to diffuse the rationality of homo economicus throughout society. The problem that behavioral economics poses in this context is this: Is the model of homo economicus accurate? And if not, can homo economicus be produced? As to the first question, the research program of behavioral economics challenges the empirical validity of the strategic rationality, strictly understood, of the American neoliberalism that Foucault critiques. However, homo economicus as economic subject, and the spread of this model throughout the social realm, is not wholly contingent on its verifiability as a completely accurate description. Instead, homo economicus is more of a grid of intelligibility, an epistemological matrix of economic and social relations. Furthermore, while behavioral economics does indeed challenge the veracity of the perfectly rational, self-interested, utility-maximizing model of homo economicus, it does nothing to upset the broader model of an individual allocating scarce means to varied ends. Indeed, much of behavioral economics is the attempt to systematically theorize and model that strategic rationality, even if it is different than that of the classical formulation. That is, while problematizing the content of homo economicus’ strategic rationality, the form remains unchanged. Camerer and Fehr (2006) push this even farther (unwittingly closer to Foucault, one could argue), contending that more robust formal models of behavioral economics would further embed the economic across the social field, with a ‘unified, and powerful, approach’ able to ‘inform’ not just economics, but social sciences more broadly, the biological sciences, and ‘governments, philosophers, and lawyers’ (p. 52). This indicates the closeness of contemporary behavioral economics to the tendency of neoliberalism to generalize the economic interpretation to the entire social terrain. Moreover, behavioral economics is in many ways an attempt to produce a more rational homo economicus, one more well suited to be an entrepreneur of the self on the market. Jolls (2007), for instance, argues for using the legal system to ‘de-bias’ individuals, claiming that ‘legal policy may respond best’ to non-rational errors ‘by operating directly on the errors and attempting to help people either to reduce or to eliminate them’ (p. 137). If the market cannot fix the individual, perhaps governmentality can fix individuals for the market. A prevailing thought among some behavioral economists is that the biases, errors and miscalculations individuals make prevent them from realizing their own self-interest. If this is the case, then those deviating from the neoclassical model are in effect ‘imposing externalities on themselves’ (Camerer et al., 2003, p. 1221). An asymmetrical paternalism that seeks to correct these errors is hence understood as helping people to ‘behave in their own best interests’ (Camerer et al., 2003, p. 1212). Thaler and Sunstein (2008) offer a similar defense of their own libertarian paternalism, arguing that this mode of governmentality enables individuals to be ‘better off as judged by themselves’ (p. 5). However, who is this self-blocked from achieving their real ends, and from where do these real ends come? They derive from the truth of the market. The authors claim that the economic agent is the one who deems certain ends best, but it is a certain market that generates particular agents with a set of specific ends that trains, manages and subjectivizes these actors in the first place. They are still the selves and ends of homo economicus, only this time homo economicus, as an economic subjectivity, has to be produced, through apparatuses such as behavioral economics. Ultimately, we should not be surprised that homo economicus must be produced, for the truth of the market, and the marketization of the governmental state had to be produced historically as well, as did liberal notions of freedom.Footnote9 Similarly, I argue, homo economicus and his freedom must be produced, and behavioral economics is intimately entangled in its production. An apparent paradox arises: How can homo economicus be absolutely free but also a central element of governmentality? I argue that this seeming contradiction is resolved once we understand first that freedom and homo economicus both have to be produced, and second that this production occurs with direct reference to the market and to the neoliberal economic logic of the market. Within this framework, then, behavioral economics functions as a contemporary apparatus engaged in the production of homo economicus and his freedom, an apparatus that submits what it has produced to a judgment of truth located in the market. This is an eminently neoliberal practice. Kiersey (2009) maintains that in analyzing neoliberalism, we must understand homo economicus as ‘subject to government’, as an ideal type ‘which must be produced in actuality’, meaning that one of the crucial questions to ask about neoliberalism is that of ‘how does actually existing capitalism produce [this] subject’ (pp. 381–382). Along similar lines, Brown (2005) argues that neoliberal governmentality figures humans as homo economicus through the production of economically rational actors and the imposition of market rationalities that cultivate and enact neoliberal life (pp. 40–41). What is necessary, though, is to identify and analyze what, precisely, these practices producing homo economicus are. We should conceptualize behavioral economics as an indispensable technique of this generation of economic subjectivity, for it explicitly recognizes that homo economicus indeed does not exist, and then goes on to posit and advocate for means by which he could in fact be produced. The unequivocal objective of behavioral economics is to cultivate subjects that more closely conform to market logics. Neoliberalism is a ‘new regime of truth, and a new way in which people are made subjects’, and homo economicus is a ‘creature whose tendenc[ies] must be fostered’ (Read, 2009, pp. 28–29). More attention must be given to the specific modes by which economic theory and governance specifically engage in these processes of neoliberal subjectification, such as behavioral economics. An analysis of the rationalities of behavioral economics is, I contend, vital for any attempt to account for, theorize, or criticize neoliberalism, for behavioral economics introduces new technologies of power into neoliberal governmentality in a way that buttresses neoliberal hegemony.